This Week in Startups Terra UST stablecoin unpegged with Bennett Tomlin + High growth tech’s runway: $COIN, $SQ, $ZM, $TWLO, $SHOP & $PTON | E1456
May 11, 2022
In this engaging discussion, Bennett Tomlin, a cryptocurrency reporter known for his skeptical outlook on crypto projects, dives deep into the fall of the Terra USD stablecoin and the risks associated with algorithmic stablecoins. He questions whether these coins are doomed to fail and breaks down the Terra-Luna ecosystem. The conversation also shifts to tech stocks like Coinbase and Shopify, reflecting on their dramatic declines, while briefly touching on Elon Musk's thoughts about Twitter bans and Peloton's financial woes.
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Algorithmic Stablecoins Explained
- TerraUSD (UST) is an algorithmic stablecoin pegged to Luna.
- Its value is supposedly maintained through arbitrage and burning/minting Luna.
Anchor Protocol Subsidy
- Terraform Labs subsidized Anchor protocol to offer high interest rates (e.g., 20%) on UST deposits.
- This unsustainable practice incentivized users to mint more Terra to capitalize on the high yields.
Tech Stock Analysis
- Analyze tech stocks by examining cash reserves and revenue.
- Look for companies with high cash, growing revenue, and low enterprise value relative to their potential.